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Wednesday November 23, 2011

China to ease property curbs

SHANGHAI: China will likely relax some property market curbs next year due to concerns that slumping prices could hurt economic growth, a prominent Chinese university said in a report.

China has introduced a range of measures aimed at bringing down property prices in the last year, such as bans on buying second homes in some cities, hiking minimum downpayments for buyers and introducing property taxes.

But Beijing-based Renmin University has forecast that the government would likely relax limits on bank lending to the property sector and purchases of new homes in the third quarter of 2012, according to a report published in the state-run China Securities Journal.

Industry officials and analysts are divided over when the government might ease curbs, originally put in place to cool the red-hot property sector after a surge in prices put homes out of the reach of many.

Chinese Premier Wen Jiabao recently dashed hopes of any change in the short term, saying housing prices should return to “reasonable levels”.

But cash-strapped local governments were heavily reliant on revenue from land sales, and the central government would likely intervene to prevent property prices from falling more than 25%, Renmin University said.

Property investment was also a contributor to economic growth, so Beijing might act to help ensure gross domestic product (GDP) growth which created jobs and prevented social unrest remained strong, it said.

The prestigious university's economic research institute forecast annual GDP growth of 9.2% in 2012, against an estimated 9.4% in 2011.

Official data showed the number of major Chinese cities posting a drop in home prices doubled to 34 in October from September, in a sign efforts to cool the country's surging property market are working.

Housing prices in the capital Beijing, commercial hub Shanghai and the southern cities of Guangzhou and Shenzhen among the most speculative markets all fell slightly in October from September, figures showed.

The report said property prices and sales volume were likely to continue to fall through the first quarter of 2012, but it ruled out a large-scale selloff and a hard landing for the economy. - AFP

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